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Saving Strategies and Timeframes


Don’t short-change your short-term savings. 


Saving money now allows you to spend money later. When we talk about saving, most people immediately think about saving for big, long-term goals like retirement. But creating a savings plan to accommodate short-term spending -- while not derailing your long-term plans -- is just as important. 


Define your goals

It can be tempting to charge a big-ticket, short-term expense to your credit card and worry about paying it off later. But that’s not a plan. Neither is putting your Registered Retirement Savings Plan (RRSP) or Registered Education Savings Plan (RESP) contributions on hold for a year while you save for a new car. At least, it’s not a very good plan.

 

Instead, start by deciding what you’re saving for. Here are just a few examples:

 

  • Building your rainy day fund
  • A special vacation with the family
  • A new (or second) car
  • Furnishing a new home

 

Make a savings plan

Next, estimate how much you’ll need to save. For an annual vacation, for example, you’ll want to research the cost of flights, accommodations, meals and pocket money. Let’s say your ballpark figure is $2,500. 

 

Try taking $100 from every paycheque and putting it into a separate savings account, money market fund or guaranteed investment certificate (GIC) as soon as you get paid. You might have to bring your lunch to work instead of buying it or skip your daily coffee. But you’ll be most of the way to your savings goal in a year and can travel debt-free.

 

If there’s no way you can skim $100 from every paycheque, you might need to change your goal. Putting off your vacation for another six months will give you 18 months to save, which means you’ll need to put away closer to $70 a month.

 

Whatever works for your budget, be sure you’re choosing an appropriate short-term savings vehicle. Don’t just stuff your money in a jar on your kitchen counter and forget about it, because you won’t earn any interest, and every little bit counts when it comes to short-term savings. 

 

Call us today to discuss your savings plan (and where to put the money you’re saving) for today, tomorrow and beyond.

 

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